Sure you can Google "how much house I can afford" and stumble into online tools and mortgage calculators to give you the figures. While those can be helpful, you need to understand that they only tackle general factors which don't exactly consider your actual financial situation.
Here are some of the things that you need to factor in as well as how they all fit together when trying to find out how much house you can really afford according to Trulia:
Financial rules of thumb may not always apply to you
People vary in their personal finances. The financial rule of thumb is that your mortgage payment should not take up more than 35% of your monthly income, but this could still vary depending on several factors such as your debt, monthly bills, and the amount of downpayment you have ready.
When using online mortgage calculators, be sure to be as accurate as you can with the information you provide to ensure that you can come up with the closest to actual picture.
Your lender may approve you for more than you can realistically afford
Before granting mortgage, lenders are now legally required to make sure that borrowers are reasonably able to repay their loan. However, the difference between being reasonably able and realistically able to afford should be set.
For instance, if you earn clean $5000/month and need to pay $500 for car loan, lenders would find a monthly mortgage payment of $1500 reasonable. That means you have a remaining of $3000 to cover for your remaining expenses; while that can be enough for living expenses, what then goes to your retirement savings?
A large monthly mortgage payment could put you in a squeezed situation of having to cover your living expenses, monthly bills, and loan payments from what's left of your monthly income after mortgage. So even if your lender qualifies you for a reasonable mortgage, make sure that you don't max out your house budget and have enough for other financial priorities.
You're the only one who can determine what's comfortable
At the end of the day, it all depends on what adjustments you are willing to do to make room for a mortgage.
Maybe you are completely fine with cutting back on eating out, luxury vacations, and sticking to your old version of iPhone to afford a larger monthly mortgage. Or you can even decide to go for renting so you don't have to worry about the financial responsibility of a mortgage.
You are the only one who can determine what's comfortable for you when it comes to your budget as well as long-term plans and goals that you want to achieve.
